The game was originally planned to be entitled Diddy Kong Pilot and to be a sequel to Diddy Kong Racing for the Nintendo 64, but due to Rare being bought out by Microsoft Studios, the characters were changed from those of the Nintendo-based Donkey Kong series to those of the Rare-based Banjo-Kazooie series because Rare no longer held the rights to the Donkey Kong characters. This was also the last Banjo-Kazooie game released for a Nintendo console due to Rare's payment with Microsoft.

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The game was originally developed as Diddy Kong Pilot, in which it serve as a sequel to Diddy Kong Racing. The only known playable characters were Diddy Kong, Donkey Kong, Dixie Kong, Cranky Kong, a new Kong named Redneck Kong, Kritter, Candy Kong and King K. Rool. However, due to Microsoft purchasing Rare, the game was changed to Banjo-Pilot as shown in the 2001 footage.

In the 2003 alpha footage on YouTube, it reveals that the game has been totally reconstructed into a new game. Donkey, Diddy, Dixie and Funky are the default characters and Kritter, Klump, Klaptrap (named Klap Trap in-game), King K. Rool and Cranky Kong are unlockables.

Later, in 2005, Donkey Kong characters were replaced with the characters of Banjo-Kazooie series. Diddy was replaced by Banjo, Dixie has been replaced by Jinjo, Donkey has been replaced by Kazooie, Funky has been replaced by Mumbo Jumbo, Cranky has been replaced with Bottles, Klaptrap has been replaced by Jolly Roger, Kritter has been replaced by Humba Wumba, Klump has been replaced with Klungo and K. Rool has been replaced with Grunty.

The music of Banjo-Pilot was composed by Robin Beanland and Jamie Hughes. According to Rare, as the game title was first Diddy Kong Pilot, the game's music tracks are based on Donkey Kong Country's soundtrack.

Banjo-Pilot received mixed reviews. IGN gave it an 8 out of 10, praising it as the second-best GBA racer.[4] It received three out of five stars from GameSpy, who said it "wasn't worth the near half-decade wait."[5] Generally, those who praised the game did so for its addictive multiplayer mode and large replay value, while those who criticized it did so for its simplicity in design and loose physics. GameSpot awarded the game a score of 7.2 out of 10.[6]